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A needed review

Rochester Business Journal

July 18, 2014

Starting a year ago, the state Authorities Budget Office widened the scope of its annual report on the finances and activities of New York’s 568 state and local authorities to include a five-year look at authorities’ costs, debt, staffing and compensation practices. The report gave a clearer picture of these authorities and the role they play.

Last week, the ABO issued its 2014 report, and once again it contained interesting and at times eye-opening data. For example:

State authorities ended 2013 with $151.9 billion in outstanding debt, up 6.4 percent since 2009.

More than one-third of outstanding debt issued by state authorities came at the direction of state government “for purposes unrelated to the mission of these authorities.”

But unlike a year ago, when the report came with relatively little analysis, this year’s introduction by ABO director David Kidera contains some pointed observations. For instance, he notes that although public authorities are expected to act as independent bodies with directors having a fiduciary duty to the authority, one-third of current board members are elected or appointed public officials with potentially conflicting responsibilities.

He also states that on average more than 20 percent of public authorities fail to meet their statutory reporting requirements.

Perhaps most provocatively, Mr. Kidera asserts that “the presence of an (industrial development agency or a local development corporation), the number of projects assisted by these entities, and the amount of financial assistance provided to projects has little correlation to any change in private-sector employment in the county (where) those IDAs and LDCs are located.” Thus, he adds, “any evaluation of the effectiveness of economic development agencies and the cost benefits they produce is difficult.”

As Mr. Kidera notes, the information in the ABO report is “useful, but incomplete,” largely because of insufficient reporting. There are no easy judgments to be made.

At the same time, it seems hard to argue with his statement that the current laws governing the activities of certain authorities “are in need of review and reform.” The ABO report is a good place to start that discussion.
7/18/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.